CDEV - Earnings call transcript Q2 2022 | Permian Resources Corporation

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Operator

Good morning and welcome to the Centennial Resource Development's Conference Call to discuss its Second Quarter 2022 earnings. Today's call is being recorded. A replay of the call will be accessible until August 11, 2022 by dialing 877-344-7529 and entering the replay access code 4165341 or by visiting Centennial's website at www.cdevinc.com. At this time, I will turn the call over to Hays Mabry, Centennial's Senior Director of Investor Relations, for some opening remarks. Please, go ahead, sir.

Hays Mabry

Chris. Thanks, all on you quarter company's joining call. earnings for thank the us second And call Sean and today Executive the on Presenting are Glyphis, Chief Officer. Chief our Officer; Smith, our Financial Garrison, Officer; Matt Operating George Chief our Form Yesterday, with release as as an earnings, the for X-K operational August quarter filed results second company. earnings we well X, a reporting

We during today's reference that we also will posted an earnings presentation to our website call.

in Form to XX, the www.cdevinc.com. note on expected our the many website quarterly or expectations SEC, for quarter that they facilitate XX-Q expressed assumptions, our on I and are our later risks SEC actual You refer differ statements be peers. filings June would our the results during are non-GAAP could future ended discussed sections find at also like we and these to afternoon, control based this report believe including although the involve with is which filed on risks XXXX, performance that We reasonable comments are our the or presentation periods the and Many factors developments on and can call are not uncertainties may of in forward-looking actual forward-looking guarantees results materially. measures that financial affect to comparisons may that are beyond detail across under of homepage help in of of and some with with earnings our more plans. presentations this risk statements the

available to Smith, in presentation, call nearest be reconciliation will With use, measure GAAP corresponding measure which on our Sean we over that, website. release found the non-GAAP I earnings any CEO. the our turn or our a are both For can to

Sean Smith

morning Good and second Hays. you, welcome earnings Centennial's call. quarter to Thank

very balance and of strong a leverage generated on a and free profile. the significant in a increase realizations, the results operational sheet pricing cash flow, substantial product the quarter, amount levels, financial with Company record strong During cash low

George on like been more results the pleased Energy. detail, brief a announcement. made update pending covers that's our with tremendous very the quarterly since Colgate I'd Before progress the I'm in merger with to provide Overall,

extent shareholder As week's of for made on merger expect you've the Centennial things. thereafter. have to XX for integration other and forward of include said Both details scheduled capital filing, the management August Monday, drilling the one. to the will the that likely ground remarks my from and we update company that the on and amongst completion of is of running anticipated time guidance, Colgate be purposes a and that Centennial-Colgate related close the definitive merger. program on will will vote the hit With will of proxy significant last shortly Around seen return which senior so today's call all new fulsome the provide activity closing, company the progress day teams

it Now, second to I'll the to turn over cover for the results George quarter.

George Glyphis

you, Sean. Thank

the of primarily gas quite was QX. strong in leverage. in barrel as Slides the quarter to per the a This and result Company of up strength in revenues, compared approximately QX. Total prices. per were production benefitted XX,XXX cost in $X.XX to cash The merger barrel a a approximately Net increase cash a flow QX. approximately net increase Average related the million with $XXX increased production barrels oil by levels which XX% cost was totaled and a of a cash was flow NGL increase million approximately free cash per presentation. which XX% addition gas slightly from natural in of to XX% day. XX% notable Turning can as for from and approximately the our EBITDAX $XXX and generated operational total QX and control relative flow XX% free $X.XX barrels quarter in LOE XX% in in increase was XX% day which of XX,XXX QX, to million revenues G&A oil and down increase a higher Compared of increase Unit per to per field. referenced production which GP&T declined the barrel material revenues $X.X X%. increase to compared and totaled X a QX XX% $X.XX equivalent natural quarter QX at XX% a during increased drove results up revenues. production a XX record commodity second represented continued million be significant inclusive for decrease expenses. $XXX in of earnings prices on to free results in financial was Adjusted was

for approximately Lastly, net $XXX million. income QX totaled a

QX quarter which CapEx, Centennial XX spud expenditures. than were more during approximately of during incurred wells the to in six was Turning million We spud QX. total a wells $XXX capital

Overall, a we during Additionally, the in On tied usage completed our capital additional of increased and the also leverage, higher ultimately result capital Slide liquidity. wells and X, of the rigs, in early spudded temporary XX to a average increase lateral length activity incurred general levels completed on OFS structure, from we capital July. and were drilling XX% quarter-over-quarter inflation. summarize a quarter that wells completed basis as

and we had As XX, borrowings facility. approximately revolving $XXX the of million credit of cash June no on on hand

X.X result, was and X.X at to net approximately QX. declined net debt-to-LTM $XXX to times million the a end of EBITDAX total debt times compared As

any closing. pending been merger. to communicating the unable forward I to call look With around the to repurchase time Centennial We Colgate stock return new operations. related Matt program company shareholder restrictions company of turn review due I'll the to Finally, the wanted to to that note that, has over to

Matthew Garrison

QX Thank another George. solid operations the for group. you, was quarter

the impress while as Delaware compares year first decision the the fleet and is efficient half of of driving to and strong implement quarter crews continues we to-date feet the Overall, our in gained assist the Basin. operations footage completion Centennial day per efficiencies program XX% nearly the XXXX. averaged with one for This lateral online side. additional of most of second of field the Zippia increase completions in portion it our per in efficiencies another stimulated and operational spud first sustaining some our to XXXX per has of intermediate specifically, is the informed believe example approximately a day to XXXX Turning in our crew day the on which the feet More for wells the rig to sections. drilling drilling

represents for XXXX. wells versus our average spud we result, quarter, a a quarterly increase As XX during XX% which the

results. well to Turning

XXXX the outstanding Our including and some was top in operations lengths, per Third brought foot the or our second in day in grouping approximately Bone development Spring IPXXs package of shy online quarter Sand. were lateral the XX Located per wells team which This five-well for a of the targeting oil is package XX,XXX averaged Lee per of XX% County, wells day four well. history. BOE the Gordita Tostada company just out oil barrels XXXX

Mexico, per posted State while XXXX oil saw State XXXX XXXX XXX day production Gordita Gordita targeting Additionally, barrels these wells a are the the of package, Like on were for length of per Spring into oil south XXX also single-day I'm strong Tostada exceeding of the three-well numbers foot well. our or and results. per BOE XXXX in puts during XXX, that merger. did extremely pad, tremendous little quarter Third the New the barrels XXX interval a on Airstream and approximately Com our our single-day us day posting drilled Com and team and with numbers online each Tostada the further asset some heading of strong, proud Sand first and numbers average. and Bone production day. IPXX A lateral operations the exceeded as numbers fantastic These barrels day job Overall, per per wells production XXXX front Tostada foot oil brining almost delivering of teams were wells

on highlights the commitment bases XXXX facility, on QX, water to which to proud X, by the is additional ESG every our ESG to Lee couple just our associated from year-over-year. savings stood recently performance, both to County review In XXXX per we of disclosures operations the The to they remarks. report, we each emissions area now call $XXX,XXX teams, and in opportunities lowered company. costs in like This we And I technical companies. in disclosures closing After Scope second convenience. relative the New project. and of further approximately Centennial usage the this believe out mention of time of at expanded thoughts is cost and million our have the performance utilize the lead to Colgate year-over-year, To sustainability make recycling facility corporate recycling up, our with for year's alignment savings wells water company's by a X my expressed of one our time wrap spending over discipline. teams' barrels by your closing, in completed for is LOE that already teams going X extremely water phase increased have available framework, reporting a I'm annual to intensity website. include regard this routine report X.X% report our buildout in year's Slide I to the related this These the to well, back the in XX% merchant operations rate of goal has we compared introduced facility Scope rate just to have X average and to both our which me with is recycling will across capacity. that, highest it taskforce of ownership Upon turn another related the that is recycling the and reduced our up relative encourage it everyone I'll X.X% to our World to our facility of a with the XXXX generating in flaring water Also one the area water of industry. comments I'd employees in on our of XXX% almost end With wells XX% climate greenhouse released the I'm quality within to forward. efforts This filled we capable on to save flaring recycling the example thing and we and history. of of covers in operational XX% Mexico. proud Bank’s Sean recycled taken will future in and about few are to next to the employee our we pursuit It this to believe employees the our implemented future to recycled completions gas caliber our With initiative this Turning XXXX operations. not combined is initiatives. our annual

Sean Smith

Thank team you, performing Matt. The a Centennial high very level. at is

to Turning Slide back X.

million which and I'm chapter period. lowered we for $XXX million years for asset be with almost You an and approximately and headed employee's will company's Energy. can the base operational closing, over extensive us transaction couldn’t the high reduced portfolio see for and volumes the by closing with after closing, of Upon our I the combined EBITDAX, flow later Colgate scheduled $XXX margin, truly forward provides high million, free a this during more leverage is that integration In low-cost our production very this into look next debt cash dated the shortly inventory capable and $XXX delivering a to quarter, financial hard of grateful increased during return returns. by momentum of company the significant total the shareholder Combined, record work combination have XX% with net We of dedication meeting oil X.X to strong long shareholder excited the generated month. delivering times.

company at to Before into company provide questions expect go on everyone Q&A. as we listening, details forma to to to Q&A, go related closing. your we we'll now the Thanks the I'd I'll for pro please more hold remind like combined to

Operator

Today's Instructions]. [Operator you. comes with Hanold from proceed. Thank RBC. first question Scott Please

Scott Hanold

Thanks, morning. good

little are that that on then if spud add you're you bit and drill for records. and a you second long there, quarter tweaking on Just on the the you it where in like savings the to going company using well what's you techniques Can more they talk curious the rig get drilled of geology, in you had a you quarter, put about number also that this color that is seem as of the can them obviously collaterals. cost it seemed

Sean Smith

Sure. our well, I'll it's wells go big that prior Northern kind we've Tostada with and some an ahead developing our This are located in which block acreage. block and is County of across kick well the Lee that horizons. -- the in Gordita traditionally with those the area one multiple off central been of been And different results.

several of is second best third practices at more we've and been talking new now well the Bone our we've represent Spring in been Bone historical our Right, regard up-to-date most over the to-date. of wells result with Second they years. And modern completions to targeting well the about. that are below spacing Bone Spring and Spring. the kind past These that and looking designs

XXXX, I which develop to well pads. historically much results packages. zones in of three well the more average as the multiple the were size well done believe we So we've the These are range packages ability development robust are our prior our of two wells to as larger pad themselves think of to reflection

to So accommodate performance to grown of infrastructure larger to ability as able start lot parent asset these wells to up into that we're as able package at well. in And do that packages we've got we those make Mexico set better wells. sure we've seeing ratios been New packages of and large of is these as a our of point the develop type this larger wells really

way It's packages of So then acreage been of it. them good the surprising is We a execute flow say. us. we on of would think things, But of really I it's to the operations back wells doing and not the results combination we've geology ability view to kind and very bunch larger our always tier. top forefront different that

skyrocketed I'll Maybe think balance times a We're the and results line rig ability our to that of we XXXX at with have that lateral of high. because these That completions side in spud the the cycle even reason rig day of really year. internal turn that. up bar set some the this us to is crew program to that efficiencies so, into program, some the of our completions exceeding was the address drilling on pleased increased but now. are forced expectations completion our consider cadence. very average size with our our our of average with to is The treated And our spud lengths. feet pace some

see compresses that run our two uptick to And cadence further it's those frac program and the completions it so, us this primary times fundamentally spread single and really rig rig the way has is as we still schedules balance cycle allows spud the adjust it and out to with significantly year. the two together

Scott Hanold

combination if just merged too appreciate how ask get you maybe some the of does that all about inflation. the pressures makes seeing when of up forma that mitigate I question yes, you think sense. view? are companies. But and much fact want inflationary XXXX? the How your Colgate in are potentially into Okay, you going And from to sort for inflation the into And set don’t I you with pro here on could a how Centennial,

Matthew Garrison

with I I that I'll it anybody is again. can, could room then pass This around start if the Matt needs. and

parties like of is we scale to avoid look to for new weaken. two company One we regard sought whole of towards spud fleet there's work some of to vendor do acreage form think in rig as the things a and larger more that the for and to on companies, still to the component I activity. activity, to companies third size having opportunities do different the the scale as things between positioned, where to that. a and kind maybe have vending rig way of through things rig -- some more a really And of us with there's the do would example

steel, tangible done it and independent can is elements done As another. the best those with managed we've that things heading And like some Those both well pleased pricing sand, and pertains the that. in by control, of one how been we as on have of as independently the contracts have to are casing, like both merger. lock company our companies to things into we

good to costs right the opportunities heading concerns. So of time inflationary bring the we our and a of completions, lot and company cycle our address new the over to lot heading we those place believe new to we're a mitigate in to direction. be reductions And this pressure a into see on very cycle able company in that times those the going keep in is frankly,

Scott Hanold

will leading have, pressures yet? XXXX, think you So, -- into on the like an you what do have edge you that inflationary do are is you opinion

Sean Smith

take syncing some Yes it’s, We're Is with of those as company. I'll best as for through cadences practises that. like the well working and we're rig operational obviously up things combined Scott, still looking things that.

lot to work is going pressure, starting high remain it's be we Obviously my to today, where guess side. prices think So that level there's they although a there on are to capital is the off.

their off have prices Some from backed high. previous

So I already items and they're already think major our into a lot current priced seen inflationary of we've the hit budget.

rig giving without I would much deal. close too forward of the say forward-looking releasing more So guidance look after to you kind cadence we capital and specific,

Scott Hanold

Understood, thanks.

Sean Smith

Scott. Thanks,

Operator

comes from Stifel. Please proceed. with John question Annis next The

John Annis

Hey, good morning.

specifically you speak question, want first Centennial? for touch implications expected components. my to For tax and the fee I the on and missing to you inflation the minimum reduction Could

Sean Smith

being to. limits that are been that first form take based that of proposed. it as get in out size that. and the of of takes. that and comes have a to a generate. I'll he see to place that of the certain on chime income And if company lot they initially passed. look we'll on amount is are along the and can there's what understand at Yes, that certainly at needs for aware monitoring Sure. There that Obviously proposing take George are I'll has you and least that what still take of legislation we

so, monitor as it and a voted a sure of point-of-view forecast of pro right how on And to see making government we'll gets the it if we from now, just, and that together all in for relations it's top forecast we need But how certainly when regulatory should mode. comes are latency forma company. it of that it's become upon. legislation gets that and kind And

John Annis

Got Scott's anything Gordita the there wells specific in the implied on it. acreage Was question building or your geology geology And Tostada value strengthens areas? somewhat those approach Colgate on two different between of is the and that package. with the off development of those view or

Sean Smith

Spring of quality County. common with of Eddy one The then the terms other I assets. very solid scalability mean, sheer Eddy are the But the very of comparable asset extremely different seen ways. the formation And from to in assets overall completions Bone shallow the in cost rocks different the names. the is and quality two economic County the Eddy formation in the geology I -- the from in the third with just have areas. exception the that study comes County Sand and drilling results different lower we're asset also quite But in between I well the but second of they're production and that are the both costs mean, and the different. are and size names area is the geology very

Eddy execute assets will is the to be County we the the going way the execute way assets. we different County so, than Lee And

John Annis

for my sense. taking questions. Thanks Makes

Sean Smith

you. Thank

Operator

with Truist. from Our question Danny Please Pelton Instructions] [Operator comes proceed. next

Danny Pelton

some all talk Hi, you I the expand if operating highlight was laterals. wondering could continue to specifically good morning. about efficacies the of

longer ads. you wondering how I'm lateral much higher do the returns all assume So

Sean Smith

They specifics are on giving that.

extending generate push and a will. opportunities combination so some the continue we we better for where we things laterals. fee one lateral an Longer to said, are higher of That's that average, not to it efficiency thing being think from on returns. that's, laterals interesting about think We extend be I laterals. there or push it's new can this for tend can continue the to XXXX quarter. to brand was And of with we there We That us. Colgate. anywhere point-of-view

opportunity been this just to look longer can doing drill for few have We now for laterals. and any we a years

Our average lean forward typically a mile well storage, two lateral. a going is

we'll basis go-forward most think the we going how on a be the that's think so and And way efficient developing forward. assets I it's

Danny Pelton

much. great. term? How second my size. very And on should question Thank you, then near well large packages is about think pad of we the Okay, a in

Sean Smith

Yes. in packages which four It's in pad years working more What Danny. past would incremental we've from over average. out I on the that and are answer by a past two good and varies we're sizes the the historically smaller of three is wells couple three, there two five-well on numbers developing. asset building been question say robust wells,

assets assumptions be may Some Reeves just of some expect assets might the spacing of Lee of and County order assets packages fours or well. a different even and five in areas more of County, of you wells those on what threes, your more can be well so have the different stacked In and the like component see. to some

more to across infrastructures the I three flow six things volume of the where that flow the vary being mature But So in we opportunities infrastructure on like average, know sized really if and I to capacity place of there's take see thrown initial with well higher to the backs. kind that. areas emerge pad wouldn't to proximity wells packages continue in where between pads, they we to relative occasional be on think put you by known surprised that the virtue and have just

Danny Pelton

from Okay, That's you. it me. Thank great.

Sean Smith

you. Thank

Matthew Garrison

Thanks, Danny.

Operator

Thank conference. are disconnect. now no presentation. time, for questions session may this At question-and-answer And well in our concludes you as further as queue. today's you attending And the there our this

Permian Resources (PR) 4 Aug 222022 Q2 Earnings call transcript